UNIVERSITY OF SUNDERLAND ASSESSMENT COVER SHEET / FEEDBACK FORM MBA Student ID: 19906980804 Student Name: Joyce Mulekye Kasyoki Module Name: MBA Dissertation Module Code: PGBM31 Centre / College: Intel College, Nairobi Kenya Due 13 May, 2011 Hand in Date: 13 May, 2011 Assessment Title: Assessment of employee perceptions on decentralisation of shared services: A case study of World Agroforestry Centre, ICRAF Learning Outcomes Assessed: Learning Feedback relating learning outcomes assessed and assessment criteria given Mark: Outcomes to students: Declaration and copyright Assessed: I, Joyce Mulekye Kasyoki, Sunderland university registration number: 19906980804, declare that I am the sole author of this dissertation, that during the period of registered study I have not been registered for other academic award or qualification, nor has any of the material been submitted wholly or partly for any other award. This dissertation is a result of my own research work, and where other people‘s research was used, they have been dully acknowledged. Area s for Improvement: General Comments: Assessors Signature: Overall Mark (subject to ratification Moderators Signature: by the assessment board) Date…………………………….. Signature …………………………… Joyce Mulekye Kasyoki CANDIDATE Students Signature: (you must sign this declaring that it is all your own work and all sources of information have been r eference d) Declaration I, the undersigned, declare that this is my original work and has not been presented to any institution or university other than the University of Sunderland for academic credit. I further declare that I followed all the applicable ethical guidelines in the conduct of the research. Signed..................................................................Date.......................................................... Joyce Mulekye Kasyoki. Registration Number 19906980804 This dissertation has been presented for examination with my approval as the appointed supervisor Signed..................................................................Date.......................................................... Dr. Amos Njuguna ii Abstract Decentralisation of shared services is an important strategic tool because it standardises business processes and operational procedures, reduces costs and optimises operational efficiency in a way that enhances compliance with regulatory requirements and better services to the customers. The purpose of this study was to assess the employees‘ perceptions on decentralisation of shared services model for ICRAF. The study used a case study of ICRAF to bring out the benefits of decentralising shared services, determine the criteria that should guide decentralisation, establish the challenges to decentralisation, determine the factors that influence effectiveness of decentralisation and to craft strategies that can enhance decentralisation of shared services. Stratified random sampling was used to select 118 employees from ICRAF payroll of whom 84 responded to the survey. Data was analyzed by use of descriptive statistics and one way ANOVA. The study shows that the benefits of decentralisation are standardization of operations, streamlining, and consolidating common business functions and processes in an organisation in order to improve efficiency and effectiveness with both cost reduction and overall profitability in mind. Other benefits include enhanced cross-regional collaborations, performance without strong supervision, staff motivation and reduced bureaucracy. The study further discloses the criteria that should guide decentralisation as providing staff with clearly defined objectives, clarity on services that are to be shared, identified core competencies, agreed tasks to be identified and ensuring that qualified and capable team leaders are available among others. The challenges to implementation of decentralisation of shared services as determined by the study are constraints by poor management skills, insufficient budgets, job losses, resistance to change, lack of understanding of staff role, time to train staff on decentralisation, duplication of services and changes in work policy as well as inadequate facilities. The strategies that can be put in place to enhance implementation of decentralisation of shared services are 1). Communication strategy — a clear, simple communication with staff: top-down- top is key to success. 2). Staff development plans: organisations must invest in training staff to equip them into taking up new roles and 3). Transparent work policies — this would lead to iii significant efficiency gains and increase the time spent by Centre resources on more strategic functions and core research activities. The study recommends enhanced managerial training so as to build adequate capacity for the decentralised structure. The organisation should clearly define the decentralisation process provide simple updates to all staff in addition to carrying out awareness campaigns. Most importantly, the organisation needs to create consultation and e-groups for staff in the regions for ease of processes integration. Keywords: Decentralisation, Centralisation, Shared Services, Attitudes, Change, Efficiency, Cost Saving, Creativity, Innovation and Organisational culture, Resource sharing, Customer service. iv Acknowledgements First and foremost, I acknowledge my God in Heaven for his favour throughout my research. Secondly, to my husband and best friend Richard Kasyoki for his invaluable support, patience, motivation and encouragement never to give up. To my bundle of joy Irene, Ian and Halima for giving me the desire and a big push to catch up with them and to push ahead – thanks for your patience too and for giving me space to study. I must admit that keeping up with the young has been a challenge but it‘s been a great joy. To the special women in my life (they know themselves) giving up was not an answer to them. I thank you very much. To my immediate family members, Intel College Director and Management Team, my colleagues in Cohort (4) at Intel, my boss Dr. Peter Minang and my very special ICRAF colleagues (they know themselves) your support is beyond words description and expressions – thank you. To my Masters in Business Administration, (MBA) degree course supervisor, Dr. Amos Njuguna it would have not been possible without your unconditional support and invaluable guidance at every step. You have made it possible for me to bridge the knowledge gap. Thank you. To my dedicated employees both in my town home and at the farm in Kibwezi – thank you for your understanding and patience throughout my research. I would also like to offer my thanks to all World Agroforestry Center (ICRAF) staff who filled out the research questionnaire and gave extra feedback even when not required to. To my friends, social networks and relatives to whom I have not been available as much as I wanted while I was confined in my world of reviews, I apologize in advance and thank you for your understanding and care at all times. The list is endless, feel acknowledged as you read through. Thank you all! v Dedication I dedicate this work to my dear late mother Mrs. Tabitha Munyasya. Mama you were and still you remain very special to me, you gave me the best values in life including education. Even in your last days at the Nairobi Hospital, Kenya in 2006, you encouraged me to go back to school and study. You showed me invaluable love always. Your special words as you called me echoed throughout out my MBA study and this has remained my strong hold ―soma Mama Mukui mwiitu wakwa, soma vyu‖ meaning read my daughter read and until you can read no more........ Mama you are irreplaceable. Mama you were the queen of my heart. I love you, mom continue to sleep well in Jesus. To my dad – I have accomplished a milestone that you have always wanted me to complete. I thank you for your encouragement and love in life. Thanks dad; you are the best ever! To my best friend and the love of my life Richard, our two children Irene and Ian. Thank you for being there at all times for me. Your love and support is irrevocable, and this is my hope and strength. vi Table of Contents ASSESSMENT COVER SHEET / FEEDBACK FORM ................................................................................ i Declaration and copyright .................................................................................................................................... i Declaration ......................................................................................................................................................... ii Abstract .............................................................................................................................................................. iii Keywords: .......................................................................................................................................................... iv Dedication ........................................................................................................................................................... v Table of Contents.................................................................................................................................................. vii List of figures ......................................................................................................................................................... x List of tables ........................................................................................................................................................... x Acknowledgements ................................................................................................................................................ v Acronyms ............................................................................................................................................................. xii CHAPTER ONE ................................................................................................................................................. 1 1.0 INTRODUCTION ................................................................................................................................ 1 1.1.1 About the International Centre for Research in Agroforestry ........................................................... 3 1.2 Problem Statement ................................................................................................................................ 4 1.3 Purpose of the Research ........................................................................................................................ 4 1.4 Specific Objectives................................................................................................................................ 4 1.4.1 To determine the benefits of decentralisation of shared services at ICRAF. .................................... 4 1.4.2 To determine the criteria that should guide the decentralisation process at ICRAF. ........................ 4 1.4.3 To determine the challenges to implementation of decentralised shared services at ICRAF. .......... 5 1.5 Justification ........................................................................................................................................... 5 1.6 Scope of the Research ........................................................................................................................... 5 1.7 Definition of Terms ............................................................................................................................... 6 1.7.1 Decentralisation ................................................................................................................................ 6 1.7.2 Shared Services ................................................................................................................................. 6 1.7.3 Organisational Structure ................................................................................................................... 6 1.7.4 Business Unit .................................................................................................................................... 6 1.7.5 Decentralised Shared Services Model............................................................................................... 6 1.8 Chapter Summary ................................................................................................................................. 7 CHAPTER TWO ................................................................................................................................................ 8 2.0 LITERATURE REVIEW ...................................................................................................................... 8 2.1 Introduction ........................................................................................................................................... 8 2.2 Benefits of Decentralisation .................................................................................................................. 8 2.2.1 Faster Delivery of Services ............................................................................................................... 8 2.2.2 Staff Motivation ................................................................................................................................ 8 2.2.3 Frees Senior Management from Day to Day Tasks .......................................................................... 9 2.2.4 Elimination of Bureaucracy .............................................................................................................. 9 2.2.5 Reduction of Overhead Costs ......................................................................................................... 10 2.2.6 Elimination of Redundant Employees and Facility ........................................................................ 10 2.2.7 Staff are More Customer Focused .................................................................................................. 11 2.2.8 Business Unit Autonomy Enhancement ......................................................................................... 11 2.2.9 Alignment of Staff to the Organisation Structure ........................................................................... 12 2.2.10 Cross-Regional Collaboration of Shared Services...................................................................... 12 2.3 Decentralisation Criteria ..................................................................................................................... 12 2.3.1 Clearly Defined Objectives ................................................................................................................. 13 2.3.2 Clarity on Services to be Shared ......................................................................................................... 13 2.3.3. Agreement on Tasks to be Decentralised Beforehand .................................................................... 13 2.3.4 Identification of Core Competencies .............................................................................................. 14 2.3.5 Clarity on Functions to be Decentralised ........................................................................................ 14 2.3.6 Clarity on Functions to be Centralised ............................................................................................ 14 2.3.7 Vision, Scope and Objectives ......................................................................................................... 15 2.3.8 Costs ............................................................................................................................................... 15 2.3.9 Geographic Location....................................................................................................................... 15 2.3.10 Leaders in the Organisation ........................................................................................................ 16 2.3.11 Volume of Work ......................................................................................................................... 16 2.4 Challenges to Decentralisation of Shared Services ............................................................................. 16 2.4.1. Inadequate Management Skills ....................................................................................................... 17 2.4.2 Potential Job Loss ........................................................................................................................... 17 vii 2.4.3 Resistance to Change ...................................................................................................................... 17 2.4.4 Time to Train on Decentralisation .................................................................................................. 18 2.4.5 Additional Work Load in Certain Departments .............................................................................. 18 2.4.6 Lack of Understanding by Staff of Role in the Decentralised Set Up ............................................ 19 2.4.7 Lack of Finance .............................................................................................................................. 19 2.4.8 Duplication of Services ................................................................................................................... 19 2.4.9 Changes in Work Policy ................................................................................................................. 20 2.4.10 Changes in Organisational Culture ............................................................................................. 20 2.4.11 Inadequate Facilities ................................................................................................................... 21 2.5 Ensuring Effective Decentralisation .................................................................................................... 21 2.5.1 Development of Concrete Policies to Effectuate Shared Services at ICRAF ................................. 21 2.5.2 Timely Communication to Staff on Workforce Turnover .............................................................. 23 2.5.3 Communication to Staff on the Financial Status of the Centre ....................................................... 23 2.5.4 Preparedness in Managing the Change Process .............................................................................. 24 2.5.5 Strong Leadership in the Decentralisation Process at HQ level ...................................................... 24 2.5.6 Strong Leadership at the Level of Decentralised Units................................................................... 25 2.5.7 Transparent Procedures and Guidance on Process .......................................................................... 25 2.5.8 Adequate Funds Allocated to Support the Decentralisation Process From the Onset .................... 25 2.5.9 Senior Leadership Team and Global Research Coordinators ......................................................... 25 2.5.10 Ensure that Differences in Geographic Conditions are Considered ........................................... 25 2.5.11 Ensure Decentralisation Process Aligns to ICRAF‘s Mission and Vision ................................. 26 2.5.12 Automation of ICRAF (internet and intranet) ............................................................................ 26 2.5.13 Staff Involvement in the Decentralisation Process ..................................................................... 27 2.5.14 Changing the Organisation Structure to Reflect the Newly Decentralised Units ....................... 27 2.5.15 Avoid Discrimination (location, gender, race, age, religion) on Placement of Staff .................. 28 2.5.16 Constantly Update Staff on Status of the Decentralisation Process ........................................... 28 2.6 Conceptual Framework ....................................................................................................................... 29 2.7 Chapter Summary ............................................................................................................................... 30 CHAPTER THREE .......................................................................................................................................... 31 3.0 RESEARCH METHODOLGY ........................................................................................................... 31 3.1 Introduction ......................................................................................................................................... 31 3.2 Research Philosophy ........................................................................................................................... 31 3.3 Research Design .................................................................................................................................. 31 3.4 Population ........................................................................................................................................... 32 3.5 Sampling and Sampling Design .......................................................................................................... 32 3.5.1 Sample Frame ..................................................................................................................................... 32 3.5.2 Sample Size ......................................................................................................................................... 33 3.6 Research area ...................................................................................................................................... 33 3.6.1 Inclusion criteria ................................................................................................................................. 34 3.6.2 Exclusion criteria ................................................................................................................................ 34 3.7 Data Collection ................................................................................................................................... 34 3.7.1 Data Collection Instrument ................................................................................................................. 34 3.7.2 Data Collection Procedures ................................................................................................................. 35 3.9 Ethical considerations ......................................................................................................................... 35 3.10 Research limitations ............................................................................................................................ 35 3.11 Chapter Summary ............................................................................................................................... 36 CHAPTER FOUR ............................................................................................................................................ 37 4.0 RESEARCH FINDINGS .................................................................................................................... 37 4.1 Introduction ......................................................................................................................................... 37 4.2.1 Gender ............................................................................................................................................ 37 4.2.2 Age of the Respondents .................................................................................................................. 38 CHAPTER FIVE .............................................................................................................................................. 76 5.0 Discussion, Discussion and Recommendations .................................................................................. 76 5.1 Introduction ......................................................................................................................................... 76 5.2 Summary of Findings .......................................................................................................................... 76 5.3 Empirical Results in Relation to Previous Research Findings ............................................................ 78 5.3.1 Benefits of Decentralisation of Shared Services ................................................................................. 78 5.3.2 Critical Success Factors for Decentralisation of Shared Services ....................................................... 78 5.3.3. Challenges to the Decentralisation of Shared Services ....................................................................... 78 5.3.4 Strategies to Enhance Decentralisation of Shared Services ................................................................ 79 5.4 Communicative Validity of the Results .............................................................................................. 79 viii 5.5 Conclusions ........................................................................................................................................ 85 5.5.3 Challenges to Decentralisation of Shared Services ............................................................................. 86 5.5.4 Strategies to enhance Decentralisation of Shared Services ................................................................. 86 5.6. Recommendations ............................................................................................................................... 86 5.6.1 Measures for Immediate Implementation ............................................................................................ 86 5.6.2 Short Term Recommendations ............................................................................................................ 87 5.6.3 Long Term Recommendations ............................................................................................................ 87 ix List of tables Table 3.1 Distribution of Respondent across sample categories .................................................... 32 Table 4.1: Benefits of Decentralisation……………………………………..................................... 44 Table 4.2: Differences in Perceptions of the Benefits of Decentralisation…................................... 46 Table 4.3: Post Hoc Analysis on Enhancing Standardization of Procedures by Region using Tukey Method.................................................................................................................................. 47 Table 4.4: Post Hoc Analysis on Reducing Bureaucracy by Area of Specialization using Tukey Method............................................................................................................................................. 48 Table 4.5: Post Hoc Analysis on Re-alignment of the organisational structure to better support the strategic direction of ICRAF by Duty Station............................................................................. 49 Table 4.6: Important Steps in Decentralisation of Shared Services.................................................. 52 Table 4.7: Differences in Perceptions of the Important Steps in the Decentralisation of Shared Services at ICRAF............................................................................................................................ 53 Table 4.8: Post Hoc Analysis on Region using the Tukey Method.................................................. 54 Table 4.9: Post Hoc Analysis on Job classification using the Tukey Method.................................. 55 Table 4.10: Post Hoc Analysis on Area of Specialization using the Tukey Method............................................................................................................................................. 57 Table 4.11: Decentralisation challenges........................................................................................... 59 Table 4.12: ANOVA on the Challenges of Decentralizing Shared Services at ICRAF............................................................................................................................................. 60 Table 4.13: Post Hoc Analysis on Time to train on decentralisation as a challenge of decentralisation by age .................................................................................................................... 61 Table 4.14: Post Hoc Analysis on Challenges by Region using the Tukey Method .......................................................................................................................................................... 62 Table 4. 1: Post Hoc Analysis of the Challenges by Education Level .......................................... 63 Table 4.16: Post Hoc Analysis Challenges by Duty Station – Resistance to Change ......................................................................................................................................................... 64 Table 4.17: Strategies to enhance Decentralisation of Shared Services ......................................... 66 Table 4.18: ANOVA on the Strategies to Enhance Decentralisation of Shared Services .......................................................................................................................................................... 68 Table 4.19: Post Hoc Analysis for Factors for Effective Decentralisation – Work Experience and Area of Specialization ..................................................................................................................... 69 Table 4.20: Post Hoc Analysis on Strategies of Implementation by Age......................................... 70 Table 4. 21: Post Hoc Analysis on Strategies of Implementation by Region................................... 71 Table 4.22: Post Hoc Analysis on Strategies of Implementation by Duty Station Avoiding Discrimination.................................................................................................................................. 72 Table 4.23: Post Hoc Analysis on Strategies of Implementation by Area of Specialization............ 74 x